Swiss Government Proposes Sales Tax Rise to Finance Pensions

(Bloomberg) — The Swiss government proposed raising sales tax by 0.7 percentage points from 2026 to pay for an increase in pensions that was backed by voters in a plebiscite earlier this year.

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The change, which needs parliamentary approval and must be signed off in a referendum, would lift the general rate to 8.8% from 8.1%, the administration said in a statement on Wednesday.

The lower level of sales tax on hotels would increase to 4.2% from 3.8%, while that for daily essentials would inch up to 2.8% from 2.6%. The hikes would apply from January 2026.

Swiss voters in March backed a proposal to introduce a 13th annual payout to pensioners, the first time in the country’s history that social benefits got an increase via plebiscite. The government said it favored raising sales tax rates, which are among the lowest in Europe, over hiking wage contributions to finance the change.

The government said separately on Wednesday that it will reduce the amount of goods shoppers can bring into Switzerland from neighboring countries such as France, Germany, Italy and Austria without paying duties.

The daily tax-free limit for importing groceries and other goods will be halved to 150 francs ($174) from 300 francs per person, the government said.

The change, which doesn’t require parliamentary approval, will take effect from Jan. 1.

Swiss consumers pay the highest food prices in Europe and a system of tariffs designed to protect the agricultural industry effectively keeps out less expensive imports. This makes shopping across the borders of the landlocked country attractive for many people.

(Updates with charts after third and sixth paragraphs.)